Fordham International Law Journal Introducing EU Competition Law and Policy in Central and Eastern Europe: Requirements in Theory and Problems in Practice

Fordham International Law JournalVolume 27, Issue 2 2003 Article 5

Introducing EU Competition Law and Policyin Central and Eastern Europe: Requirements

in Theory and Problems in Practice

Frank Emmert∗

∗

Copyright c©2003 by the authors. Fordham International Law Journal is produced by The Berke-ley Electronic Press (bepress). http://ir.lawnet.fordham.edu/ilj

Introducing EU Competition Law and Policyin Central and Eastern Europe: Requirements

in Theory and Problems in Practice

Frank Emmert

Abstract

This Article gives an overview of the requirements that must be fulfilled before a Central andEastern European Country (”CEEC”) can truly claim to be willing and able to apply the acquiscommunautaire in the field of competition law and policy and thus to be ready for full membershipin the European Union (”EU”).

INTRODUCING EU COMPETITION LAW ANDPOLICY IN CENTRAL AND EASTERN

EUROPE: REQUIREMENTS IN THEORYAND PROBLEMS IN PRACTICE

Frank Emmert *

INTRODUCTION

This Article gives an overview of the requirements that mustbe fulfilled before a Central and Eastern European Country("CEEC") can truly claim to be willing and able to apply the ac-quis communautairet in the field of competition law and policy2

and thus to be ready for full membership in the EuropeanUnion ("EU'.').3

Specifically, the Article discusses some of the practicalproblems that appear in the context of adoption of the competi-

* Professor of Law and Director, Center for International and Comparative Law,

Indiana University School of Law, Indianapolis. Until 2002, Jean Monnet Professor ofEuropean Union Law and Dean of the Law School at Concordia International Univer-sity Estonia. Comments and suggestions with regard to this Article may be addressed [email protected].

1. The acquis communautaire is the body of written and unwritten rules and princi-ples which represent the level of integration achieved in the EU to date. This includesthe various treaties between the Member States, the regulations, directives and otheracts adopted by the EU institutions, the case law of the European Court of Justice andthe Court of First Instance, and various other measures and documents. It has alwaysbeen a principle of the EU to maintain this acquis when negotiating with candidates formembership, i.e., the EU does not open the existing structure and substantive rules forrenegotiation. On the problem of evolution of the acquis between application and ad-mission of a new Member State, see Daniel D. Dobrovoljec & Katrin Nyman-Metcalf,Enlargement of the European Union - A Regatta with Moving Goal Posts?, 3 EUR. J. L. RE-FORM 131 (2001).

2. The requirements in general have been spelled out in the Conclusions of theEuropean Council Meeting held June 1993 in Copenhagen, and have subsequentlybeen developed at the Council meetings in Corfu (June 1994), Essen (December 1994),Cannes (June 1995), Florence (June 1996), and Berlin (March 1999). See, e.g., PUSHING

BACK THE BOUNDARIES - THE EUROPEAN UNION AND CENTRAL AND EASTERN EUROPE

(Mike Mannin ed., 1999); PHEDON NICOLAIDES & SYLVIA RAJA BOEAN, A GUIDE TO THEENLARGEMENT OF THE EUROPEAN UNION: DETERMINANTS, PROCESS, TIMING, NEGOTIA-

TIONS (1997).3. Although this is technically not correct, "European Union" shall be used

throughout this Article, rather than "European Community." The author shares agrowing perception in academic circles that the two organizations overlap sufficientlyso that their distinction can nowadays be limited to the cases where it actually makes adifference with respect to decision-making procedures, etc.

INTRODUCING EU COMPETITION LAW

tion acquis4 by candidate countries on their road towards mem-bership. There are many scholarly publications dealing with EUcompetition law and policy in great detail.5 There is also a grow-ing body of literature on the competition laws of the variousCEECs.6 However, there is still very little written about the im-pact of EU competition law on the development of nationalcompetition law in Central and Eastern Europe7 and most ofwhat is written in this context deals with what may be called "thelaw on the books." In virtually all candidate countries for EUmembership, the difficulty of writing new legislative acts that notonly conform to EU requirements but also pass national parlia-ments can be overcome with sufficient effort. These effortssometimes included more than a bit of plagiarism, when West-

4. A complete treatment of all parts of the competition acquis, including State aidsand the treatment of public enterprises would be beyond the scope of the present Arti-cle. Therefore, the focus of the analysis will be on Articles 81 and 82 of the Treatyestablishing the European Community ("EC Treaty"). See Consolidated version of theTreaty establishing the European Community, arts. 81-82, O.J. C 325/33, at 64-65(2002), 37 I.L.M. 79, at 93-94 (ex Articles 85 and 86) [hereinafter Consolidated ECTreaty], incorporating changes made by Treaty of Nice amending the Treaty on EuropeanUnion, the Treaties establishing the European Communities and certain related acts,Feb. 26, 2001, O.J. C 80/1 (2001) [hereinafter Treaty of Nice] (amending Treaty onEuropean Union ("TEU"), Treaty establishing the European Community ("ECTreaty"), Treaty establishing the European Coal and Steel Community ("ECSCTreaty"), and Treaty establishing the European Atomic Energy Community ("EuratomTreaty") and renumbering articles of TEU and EC Treaty). Occasional remarks will bemade about merger control.

5. The classic text in English is the book by CHRISTOPHER BELLAMY ET AL., EURO-

PEAN COMMUNITY LAW OF COMPETITION (Peter M. Roth et al. eds., 5th ed. 2001); see alsoJONATHAN FAULL & ALl NIKPAY, THE EC LAW OF COMPETITION (1999); ULRICH IMMENGA

& ERNST-JOACHIM MESTMACKER, EG-WETrBEWERBSRECHT KOMMENTAR (1997). Other use-

ful volumes include D.G. GOYDER, EC COMPETITION LAw (4th ed. 2003); ALiSONJONES &B.E. SUFRIN, EC COMPETITION LAw: TEXT, CASES, AND MATERIALS (2001); VALENTINE

KORAH, AN INTRODUCTORY GUIDE TO EC COMPETITION LAW AND PRACTICE (7th ed. 2000)(providing student-friendly material).

6. See, e.g., Eleanor M. Fox, ABA Section of Antitrust Law - Comments on Draft Bulga-rian Antitrust Law, 60 ANTITRUST L. J. 245 (1991); Ilona Nurmela, Euroopa Liiduja EVkonkurentsidigusest Rooma lepingu artiklite 85 ja 86 ning uue konkurentsiseaduse eelndu pdhjal,JURIDicA 352-58 (1997); Mihdly Maczonkai, Harmonisation of Competition Law and JudicialPractice in Hungary, in ON THE STATE OF THE EU INTEGRATION PROCESS - ENLARGEMENT

AND INSTITUTIONAL REFORMS 108-23 (Ferenc Mddl ed., 1997); MARjo OJA, THE COMPE-

TITION LAW OF CENTRAL AND EASTERN EUROPE (1999); John Clark, Competition Law andPolicy in the Baltics - A Progress Report, I OECD J. COMPETITION L. & POL'Y 149 (1999).

7. For notable exceptions, see Phedon Nicolaides & James Mathis, European Com-munity Competition Rules in the Associated Countries of Central and Eastern Europe: How toEnsure Effective Enforcement, in 51 AUSSENWRTSCHAFT 485-512 (1996); Tadeusz Skoczny,

Harmonising Polish Antimonopoly Law with EC Competition Rules, in I Y.B. OF POLISH EUR.

STUD. 89, 89-102 (1997).

644 FORDHAM INTERNATIONAL LAWJOURNAL [Vol. 27:642

ern European laws were used as models.' They sometimes in-cluded more than a bit of blackmailing, when national parlia-ments were being warned that early membership might be jeop-ardized if a ministerial draft was scrutinized too carefully byparliament, let alone amended!9 However, as can also be seen invirtually every candidate country, the laws on the books are onething, and the practical application is quite another.

The present Article aims to spell out the application prob-lem in more detail and to show ways and means of improving thesituation before and after accession. Those findings are basedon ten years of experience as a university professor, legislativeadvisor, and private consultant, working with students, practicingattorneys, judges, public prosecutors, and civil servants in theCzech Republic, Estonia, Hungary, Latvia, Lithuania, Poland,Romania, Slovakia, and Slovenia. The essence of the analysis,problems and suggested solutions, applies to all of these coun-tries. However, there are obviously differences in detail and thedevelopment has been uneven yet dynamic throughout. Thisshould be kept in mind whenever a particular problem does notseem to concern one country or a particular solution does notseem to fit in another. It would be beyond the scope of oneshort article to seek to provide comprehensive analysis of the sit-uation in any one CEEC, let alone a fair analysis of the generalsituation in all CEECs.

The choice of competition law to illustrate the problemswith application of the law in CEECs was quite arbitrary. Thefindings can be transferred quite easily into other areas of law,such as environmental or consumer protection, commercial law,

8. Until not too long ago, it was common practice in Latvia to simply translate EUdirectives into the Latvian language and then present them to the national parliamentfor adoption. A simple look at Article 249 of the Consolidated EC Treaty should showthat such a practice is highly problematic because most directives are not - and are notmeant to be - sufficiently clear and precise to be applied directly.

9. Estonian parliamentarians have repeatedly assured me that they were regularlyconfronted with draft legislation for the implementation of an EU directive with in-structions that amendments cannot be done without making the draft incompatiblewith EU requirements. Furthermore, the sheer quantity of such implementing legisla-tion often left them less than two hours for three readings of a new piece of legislationbefore the final vote was taken and the act entered into force. On the other hand, thefact that the Polish Sejm sometimes acted more like a sovereign legislator and exercisedchoices, some of which were not necessarily or clearly given to it by the EU directives,caused some dissatisfaction about Poland's willingness to dutifully adopt the acquis com-munautaire.


much of administrative law, etc. If anything, the area of compe-tition law is less problematic from the legislative perspective be-cause EU law exists largely in the form of directly applicable reg-ulations. However, this same fact makes careful analysis of theinterface of EU and national law in the context of competitionlaw in practice very important. National actors will not be ableto hide behind inadequate national legislation. To say it differ-ently: in the context of competition law, the liability forbreaches of EU law will bear more directly on the private sector- including the legal advisors of the larger undertakings - andless on the governments of the new Member States.

The analysis will begin with a review of obligations alreadybinding upon the candidate countries under the associationagreements with the EU concluded between 1993 and 1999.Their performance to date can give some insight into theproblems yet to come when the full force of EU law becomesapplicable on day one of membership, i.e., on May 1, 2004, whenthe Czech Republic, Estonia, Hungary, Latvia, Lithuania, Po-land, Slovakia, and Slovenia are scheduled to join.

I. OBLIGATIONS UPON CANDIDATE COUNTRIES PRIOR TOACCESSION IN THE FIELD OF EU

COMPETITION LAW

In the 1995 White Paper on the Preparation of the Associ-ated Countries of Central and Eastern Europe for Integrationinto the Internal Market of the Union,10 the European Commis-sion listed all essential legislative measures to be adopted by thecandidate countries in order to fully implement the acquis com-munautaire. The White Paper also made suggestions as to thepriorities to be taken - "Stage I"-measures. In particular, itpointed out basic rules that should be in place before more de-tailed legislation could be adopted.

The White Paper emphasized the importance of effectivecompetition policy as a foundation of a successful transition to amarket economy. Candidate countries were encouraged to har-monize their legislation to EU standards in four areas: the pro-hibition of cartels and anti-competitive agreements; merger con-

10. Commission of the European Communities, White Paper: Preparation of theAssociated Countries of Central and Eastern Europe for Integration into the InternalMarket of the Union, COM (95) 163 Final (March 1995) [hereinafter White Paper].

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646 FORDHAM INTERNATIONAL LAWJOURNAL

trol; State aids; and the behavior of (State) monopolies and en-terprises with special and exclusive rights.

As such, the White Paper did not create any binding obliga-tions for the CEECs. Nevertheless, candidate countries knewthat they would not be admitted into the EU unless they hadachieved "stability of institutions guaranteeing democracy, therule of law, human rights and respect for and protection of mi-norities,"'1 and "the existence of a functioning market economy,as well as the capacity to cope with competitive pressures andmarket forces within the Union."' 2 Furthermore, membershiprequires "the ability to take on the obligations of membership,including adherence to the aims of political, economic, andmonetary union."'3 The Commission never left any doubt thatthe full implementation of the acquis communautaire, as outlinedin the White Paper and as developed since, would be required tomeet these targets.

Theoretically, this full implementation does not have to be-gin before day one of membership. However, it is also clear thatit will not suffice just to write the required laws into the booksand declare them applicable as of May 1, 2004. The criterionapplied by the Commission was whether or not the candidatecountries were "willing and able" to apply the acquis coM-munautaire. That ability was to be demonstrated in real life -i.e., with a credible enforcement record - before the Commis-sion issued a positive opinion. Thus, the candidate countrieshad little choice other than to approximate their legislation toEU standards already several years before their admission and toshow in practice that they were able to apply it as well.

The good news in this context is that the great majority ofEU law provides for perfectly sensible rules that the CEECswould have been well advised to implement, even if they had nointention of joining the EU in the foreseeable future. 4

11. See Presidency Conclusions from the Copenhagen European Council,June 21-22, 1993, § 7(A)(iii), available at http://www.europarl.eu.int/enlargement.new/europeancouncil/pdf/cop-en.pdf (June 1993).

12. Id.13. Id.14. In the context of competition law, for example, research demonstrates "a ro-

bust positive relationship between effective competition policy implementation and ex-pansion of more efficient private firms." MARK A. DUTZ & MARIA VAGLIASINDI, COMPETI

TION POLICY IMPLEMENTATION IN TRANSITION ECONOMIES: AN EMPIRICAL ASSESSMENT

(Eur. Bank Reconstruction & Dev., Working Paper No. 47, 1999). See also WENDY CAR-

[Vol. 27:642


Several bilateral agreements between the various CEECs onthe one side and the EU on the other provided for additional ormore specific "requirements" in the field of competition to bemet by the CEECs even prior to their accession. Around thetime of the White Paper, all of the CEECs concluded agreementson "free trade and trade-related matters" with the EU.15 All ofthese contained certain provisions dealing with competition.Those provisions essentially foresaw the application of Articles81 and 82,16 as well as merger law and other rules, in the inter-pretation given to them within the EU, to the bilateral tradeunder the agreements. Bilateral "Cooperation Councils" weregiven the task to adopt the necessary rules for the implementa-tion of the competition provisions.17 Due to a three-year transi-tion period, the trade agreements were by and large supersededby more comprehensive bilateral association agreements be-tween the EU on the one side and the individual candidatecountries on the other,"8 before they could develop significancein practice.

The main instruments, which are currently still regulatingthe relationship between the EU and the candidate countries ofCentral and Eastern Europe in matters related to the "first pil-lar" are, therefore, the bilateral association agreements, com-

LIN ET AL., COMPETITION AND ENTERPRISE PERFORMANCE IN TRANSITION ECONOMIES: EVI-DENCE FROM A CROSS-COUNTRY SURVEY (Eur. Bank Reconstruction & Dev., Working Pa-

per No. 63, 2001); Richard Lang & Sven Muller, Privatisation, Perception of Success andAttitudes of Managers in the East German Transformation Process, in ESTONIAN ECONOMY AND

EUROPEAN INTEGRATION (Birgitta Berg ed., 1997); Eleanor M. Fox, The Central EuropeanNations and the EU Waiting Room - Why Must the Central European Nations Adopt the Compe-tition Law of the European Union?, 23 BROOK. J. OF INT'L L. 351 (1997).

15. See, e.g., Commission Decision No. 94/974/EC, O.J. L 373/1 (1994) (EstoniaFree Trade Agreement); Commission Decision No. 96/752/EC, O.J. L 344/1 (1996)(Interim Agreement Slovenia). Prior to the trade agreements, the bilateral trade rela-tions with some of the CEECs were already formalized as of 1992 in "Interim Agree-ments." See, e.g., O.J. L 116/2 (1992) (Hungary), O.J. L 114/2 (1992) (Poland).

16. Articles without further specification are Articles in the EC Treaty. See Consoli-dated EC Treaty, supra note 4, O.J. C 325/33 (2002), 37 I.L.M. 79.

17. See, e.g., Commission Decision No. 94/974/EC, O.J. L 373, art. 32(3), at 1(Agreement with Estonia), Council & Commission Decision No. 96/752 Euratom,ECSC, EC, O.J. L 344, art. 33(3), at I [hereinafter Agreement with Slovenia].

18. See, e.g., Europe Agreement establishing an association between the EuropeanCommunities and their Member States, of the one part, and the Republic of Estonia, ofthe other part, art. 130, O.J. L 68/3, at 33-34 (1998) [hereinafter Europe Agreementwith Estonia]. The Europe Agreements were designed to "further develop[ ] and incor-porate[ ] the essential provisions" and ultimately "replace the Agreements on FreeTrade and Trade-Related Matters." Id. art. 130, O.J. L 68/3, at 34 (1998).

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monly called "Europe Agreements."' 9 They will continue to bethe most relevant source of mutual obligations for Bulgaria andRomania, which will not become members of the EU in 2004,and probably will not for at least another five years. All of theten bilateral Europe Agreements contain similar provisions re-garding competition law and policy. The respective articles aresimilarly short, as in the earlier trade agreements and again referto the interpretation of Arts. 81 et seq. as established within theEU. For example, the Europe Agreement between the EU andEstonia provides in Article 63:

(1) The following are incompatible with the proper function-ing of this Agreement, insofar as they may affect trade be-tween the Community and Estonia: (i) all agreements be-tween undertakings, decisions by associations of undertakingsand concerted practices between undertakings which have astheir object or effect the prevention, restriction or distortionof competition; (ii) abuse by one or more undertakings of adominant position in the territories of the Community or ofEstonia as a whole or in a substantial part thereof .... (2)Any practices contrary to this Article shall be assessed on thebasis of criteria arising from the application of the rules ofArticles 85 (now Art. 81) [and] 86 (now Art. 82) of the Treaty

19. See Europe Agreement establishing an association between the European Com-munities and their Member States, of the one part, and the Republic of Slovenia Esto-nia, of the other part, O.J. L 51/3 (1999); Europe Agreement with Estonia, supra note18, at O.J. L 68/3 (1998); Europe Agreement establishing an association between theEuropean Communities and their Member States, of the one part, and the Republic ofLithuania, of the other part, O.J. L 51/3 (1998); Europe Agreement establishing anassociation between the European Communities and their Member States, of the onepart, and the Republic of Latvia, of the other part, O.J. L 26/3 (1998); Europe Agree-ment establishing an association between the European Communities and their Mem-ber States, of the one part, and the Czech Republic, of the other part, O.J. L 360/2(1994); Europe Agreement establishing an association between the European Commu-nities and their Member States, of the one part, and the Slovak Republic, of the otherpart, O.J. L 359/2 (1994); Europe Agreement establishing an association between theEuropean Communities and their Member States, of the one part, and the Republic ofBulgaria, of the other part, O.J. L 358/3 (1994); Europe Agreement establishing anassociation between the European Communities and their Member States, of the onepart, and Romania, of the other part, O.J. L 357/2 (1994); Europe Agreement establish-ing an association between the European Communities and their Member States, of theone part, and the Republic of Poland, of the other part, O.J. L 348/2 (1993); EuropeAgreement establishing an association between the European Communities and theirMember States, of the one part, and the Republic of Hungary, of the other part, O.J. L347/2 (1993).


establishing the European Community .... 20

The main question to be addressed when reflecting on theactual impact of these provisions of the Europe Agreements wasthat of direct effect, i.e., whether they were capable of creatingrights and obligations for individuals that had to be respectedand enforced by national and European competition authoritiesand courts. The literature on the possible direct effect of provi-sions contained in the Europe Agreements is plentiful and thepractice is not always coherent.2 1 In the present context, how-ever, the situation is quite unambiguous. The Europe Agree-ments themselves provided for the respective Association Coun-cils to adopt, by a given deadline, "the necessary rules" to imple-ment the articles dealing with competition. Thus, the provisionson competition in the Europe Agreements, in and of themselves,clearly did not have direct effect.2 2

Pursuant to the European Court of Justice's consistent prac-tice, it is equally unambiguous that the decisions of the Associa-tion Councils may have direct effect.23 This occurs wheneverthese decisions contain a clear and precise right or obligation,which is not conditional, in its implementation or effects, uponthe prior adoption of another measure.2 4

With regard to the competition provisions in the EuropeAgreements, the Association Councils have indeed adopted cer-tain decisions regarding implementation. One of the first deci-sions adopted by most of the Association Councils is aimed at

20. Europe Agreement with Estonia, supra note 18, art. 63, O.J. L 68/3, at 17(1998).

21. See Frank Emmert & Erelin Kikas, The Implementation of the Principle of Non-Dis-crimination on Grounds of Nationality in the Preparations for EU Membership, in ACCESSIONNEGOTIATIONS - SELECTED RFSULTS, 237-64 (Janusz Swierkocki ed., 2001) (discussing

the specific problems arising in Estonia, where the Constitution provides for supremacyof international agreements over parliamentary legislation).

22. See Meryem Demirel v. Stadt Schwhbisch Gmfind, Case 12/86, [1987] E.C.R.3719, 14, 17, 20-28; Hauptzollamt Mainz v. C.A. Kupferberg & Cie KG a.A., Case104/81, [1982) E.C.R. 3641; R. & V. Haegeman v. Belgian State, Case 181/73, [1974]E.C.R. 449. For further analysis see Ilona Cheyne, Haegeman, Demirel and their Progeny, inTHE GENERAL LAw OF EC EXTERNAL RELATIONS 20-41 (Alan Dashwood & Christophe

Hillion eds., 2000).

23. See Sevince v. Staatssecretaris van justitie, Case C-192/89, [1990] E.C.R. 1-3461,13-26.24. Id. at 15, citing Demirel, [1987] E.C.R., at 14. See also Selma Kadiman v.

Freistaat Bayern, Case C-351/95, [1997] E.C.R. 1-2133; Ahmet Bozkurt v. Staatssecretarisvan Justitie, Case C-434/93, [1995] E.C.R. 1-1475.

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"adopting the necessary rules for the implementation" of the re-spective article in the Europe Agreement itself.25 The decisionsare largely uniform. In their annex, they contain articles on"general principles," cases falling into the "competence of [EUand national] competition authorities;" cases falling under the"competence of one competition authority only;" mutual re-quests for information; secrecy and confidentiality of informa-tion; the application of the EU block exemption regulations;merger control; activities of minor importance; and various pro-cedural rules for the Association Councils. In a nutshell, the de-cisions provide for the application of EU competition law andpolicy to the bilateral trade between the parties of the agree-ment. For cases falling under the jurisdiction of both the Com-mission and the competition authority in the associated country,the rules provide for mutual notification and collaboration. Fur-thermore, it is stipulated that "without prejudice to any of theirrights or obligations, the competition authorities involved inconsultations under this Article shall endeavor to find a mutuallyacceptable solution .... ",26 For activities of minor importance,the threshold is set at an annual turnover not exceeding 200 mil-lion Euro and a market share of less than five percent in both theEU internal market and the domestic market of the associatedcountry.27

25. For Association Council decisions between the European Communities andtheir Member States, and certain Republics adopting the necessary rules regarding theimplantation of Articles 81 and 82 of the EC Treaty, see Association Council DecisionNo. 2001/504/EC, OJ. L 183/28 (2001) [hereinafter AC-Latvia]; Association CouncilDecision No. 2001/367/EC, OJ. L 130/35 (2000) [hereinafter AC-Slovenial; Associa-tion Council Decision No. 1999/411/EC, O.J. L 156/33 (1999) [hereinafter AC-Lithua-nia]; Association Council Decision No. 1999/372/EC, OJ. L 144/16 (1999) [hereinaf-ter AC-Estonia]; Association Council Decision No. 1999/249/EC, OJ. L 96/22 (1999)[hereinafter AC-Romania]; Association Council Decision No. 98/82/EC, OJ. L 15/37(1997) [hereinafter AC-Bulgaria]; Association Council Decision No. 96/651/EC, O.J. L295/25 (1996) [hereinafter AC-Slovakia]; Association Council Decision No. 96/494/EC, OJ. L 208/24 (1996) [hereinafter AC-Poland]; and Association Council DecisionNo. 96/133/EC, OJ. L 31/21 (1996) [hereinafter AC-Czech Republic].

26. Annexes of the Association Council Decisions, art. 2.3, 1 2. See AC-Latvia,supra note 25, O.J. L 183/28, at 30 (2001); AC-Slovenia, supra note 25, O.J. L 130/35, at38 (2000); AC-Lithuania, supra note 25, OJ. L 156/33, at 35 (1999); AC-Estonia, supranote 25, OJ. L 144/16, at 19 (1999); AC-Romania, supra note 25, O.J. L 96/22, at 24(1999); AC-Bulgaria, supra note 25, O.J. L 15/37, at 38 (1997); AC-Slovakia, supra note25, O.J. L 295/25 (1996); AC-Poland, supra note 25, OJ. L 208/24 (1996); and AC-Czech Republic, supra note 25, OJ. L 31/21 (1996).

27. See AC-Latvia, supra note 25, O.J. L 183/28, at 31 (2001); AC-Slovenia, supranote 25, O.J. L 130/35, at 38 (2000); AC-Lithuania, supra note 25, OJ. L 156/33, at 36


What this means is that since the entry into force of the re-spective decisions, i.e., since their publication in the OfficialJournal of the EU ("O.J.") and the corresponding national ga-zette, the rules of EU competition law, in particular Article 81(including the block-exemption regulations), Article 82, and theprovisions on merger control, are already applicable in the asso-ciated countries, as far as trade between the internal market ofthe EU and the partner country may be affected. Concretely, anagreement between undertakings having such an effect may al-ready be void and unenforceable for and against its parties.Also, competitors of participants to illegal agreements or compa-nies affected by a dominant enterprise's abuse of power can al-ready bring claims for discontinuation of restrictive practicesand even for damages (under tort law) going back to the date ofpublication of the respective decision.

From practical experience, I can tell that this fact is stillwidely unknown among legal counsel of large enterprises inCEECs and attorneys in these countries, let alone among thejudges and administrative officers. For the time being, the pre-vailing - and erroneous - attitude is that EU law is somethingto be analyzed after membership has actually been realized.Thus, we may safely presume that a good number of the inter-enterprise agreements that have been drafted by attorneys arebeing implemented without any regard to Article 81(1) and therelevant block exemption regulations. In other cases, attorneysand other legal counsel have endorsed - and will continue todo so - commercial practices that violate Article 82. As a result,clients are ill-advised, breaching binding legal standards, over- orunder-utilizing commercial opportunities, and/or risking em-barrassing litigation and damage claims from suppliers, clients,or competitors. As long as there is a kind of cartel, or at leastconcerted practice, on behalf of the attorneys in CEECs to burytheir heads in the sand, the risk may seem small. But relying onsimilar willful ignorance on the other side is not a sound strategywhen large commercial deals are at stake. Nevertheless, it willprobably take a spectacular professional liability case to bebrought against well-known attorneys or law firms in Central and

(1999); AC-Estonia, supra note 25, O.J. L 144/16, at 19 (1999); AC-Romania, supra note25, O.J. L 96/22, at 24-25 (1999); AC-Bulgaria, supra note 25, O.J. L 15/37, at 39(1997); AC-Slovakia, supra note 25, O.J. L 295/25 (1996); AC-Poland, supra note 25,O.J. L 208/24 (1996); and AC-Czech Republic, supra note 25, O.J. L 31/21 (1996).

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Eastern Europe before the new realities are widely acknowl-edged and taken seriously by the legal communities in thesecountries.

II. OBLIGATIONS UPON NEW MEMBER STATES

As of day one of full membership, the CEECs will have toimplement and apply the entire acquis communautaire, with thesole exception of those rules and provisions that have been spe-cifically subjected to transitional periods by way of the accessiontreaties. The Commission has outlined all transitional periodsagreed upon in the accession negotiations in a Spring 2003 re-port to the European Parliament.28 According to this report, Es-tonia,29 Latvia, Lithuania, and Slovenia did not ask for any transi-tional periods with respect to competition law. The other candi-dates asked for and obtained a few exceptions that are ratherlimited both in time and scope. The vast majority concern cer-tain existing State aid schemes for certain sectors of the econ-omy that have to be phased out. No candidate country has askedfor and received any exceptions with regard to the application ofArticles 81 and 82 or the merger control regulations.3 0 Thus, allrelevant articles of the treaties, almost all regulations, and almostall other legal instruments of EU competition law and policy willbe fully applicable in and for the new Member States from thefirst day of membership onwards. It is useful, therefore, to ex-amine in some detail what this means. What are the expecta-tions to be met by CEECs as far as institutional preparations andsubstantive rules are concerned?

A. Institutional Requirements to Be Met Upon Accession

On the one hand, the EU has not spelled out to the candi-date countries the respective institutional and substantive expec-tations which should be met before the doors to membership

28. See Commission of the European Communities, Report on the Results of the Negoti-ations on the Accession of Cyprus, Malta, Hungary, Poland, the Slovak Republic, Latvia, Esto-nia, Lithuania, the Czech Republic and Slovenia to the European Union, available at http://europa.eu.int/comm/enlargement/negotiations/pdf/negotiations-report-to-ep.pdf(2003).

29. On Estonia, see also Emmert, supra note 21.30. See European Commission Directorate-General Enlargement, Enlargement of the

European Union - Guide to the Negotiations Chapter by Chapter, available at http://europa.eu.int/comm/enlargement/negotiations/chapters/negotiationsguide.pdf (2003).


will open. It is a good European tradition to respect nationalsovereignty and differences, and to require harmonization onlyas far as it is indispensable. 1 Consequently, comparative analysisof the institutional and substantive regimes in the "old" MemberStates will show many significant differences and it may safely bepresumed that the "new" Member States would have to begranted similar leg room.

On the other hand, there is also the general principle thatEU law has to be effectively implemented by the MemberStates. 2 Hence, the Member States are under the obligation tocreate the necessary legal and institutional infrastructure to en-sure that Community law will be applied and respected.33 To alarge extent, therefore, the expectations to be met by accedingcountries can be gleaned from the existing legal rules and docu-ments. Obviously, it makes a difference in this context whetherthe EU has resorted mainly to directly applicable regulations in agiven area of law, for example in competition law, or whether ithas relied on directives which need to be implemented by na-tional legislation, as it is for the common rules applicable totrade in the internal market.

Furthermore, it makes a difference whether the EU institu-tions are provided with direct administrative powers, such as in

31. This tradition is reflected in but goes beyond the principle of subsidiarity. See

Consolidated EC Treaty, supra note 4, art. 5, OJ. C 325/33, at 42 (2002), 37 I.L.M. at

80-81 (ex Article 3b). Article 5 states:

In areas which do not fall within its exclusive competence, the Community

shall take action, in accordance with the principle of subsidiarity, only if andinsofar as the objectives of the proposed action cannot be sufficiently achieved

by the Member States and can therefore, by reason of the scale or effects ofthe proposed action, be better achieved by the Community.

Id.32. This follows from Article 10 of the EC treaty and its expansive interpretation by

the European Court ofJustice. See id. art. 10, OJ. 325/33, at 42 (2002), 37 I.L.M. at 81(ex Article 5) (stating in part that "Member States shall take all appropriate measures,

whether general or particular, to ensure fulfillment of the obligations arising out of thisTreaty or resulting from action taken by the Institutions of the Community").

33. See, e.g., Brasserie du Pecheur SA v. Bundesrepublik Deutschland, Joined CasesC-46 & C-48/93, [1996] E.C.R. 1-1029, 67-74; Comet BV v. Produktschap voorSiergewassen, Case 45/76, [1976] E.C.R. 2043, 13-16; Rewe-Zentrallinanz eG andRewe-Zentral AG v. Landwirtschaftskammer ffir das Saarland, Case 33/76, [1976]E.C.R. 1989, 5; International Fruit Company NV and Others v. Produktschap voorGroenten en Fruit, Joined Cases 51-54/71, [1971] E.C.R. 1107, 3-4; Otto Scheer v.Einfuhr-und Vorratsstelle ffir Getreide und Futtermittel, Case 30/70, [1970] E.C.R.1197, 8. See also KOEN LENAERTS & PIET VAN NUFFEL, CONSTITUTIONAL LAW OF THE

EUROPEAN UNION 419-26 (1999).

2004] 653


the area of competition law, or whether they largely depend onthe administrative capacity of the national authorities, as it is thecase for the implementation of the Common Agricultural Policy("CAP"). Institutional expectations upon the Member States willthus be lower in the area of competition law and policy whencompared to most other areas of EU law. Nevertheless, a num-ber of specific obligations imposed on the national competitionauthorities and upon the national courts can be identified.

With regard to the application of EU competition law andpolicy, institutional requirements upon the Member States weretraditionally found in: (a) Articles 84 and 85 of the EC Treaty;(b) Regulation 17"4 and its interpretation by the EuropeanCourt; (c) the 1993 Commission Notice on Cooperation Be-tween National Courts and the Commission in Applying Articles85 and 86 of the EEC Treaty;35 and (d) the 1997 CommissionNotice on Cooperation Between National Competition Authori-ties and the Commission in Handling Cases Falling Within theScope of Articles 85 or 86 of the EC Treaty. 6 For the future, thedominant role will be played by Council Regulation No. 1/2003of December 16, 2002 on the Implementation of the Rules onCompetition Laid Down in Articles 81 and 82 of the Treaty,3 7

which is replacing Regulation 17 and its implementing legisla-tion.

The first conclusion to be drawn from these sources is thefact that each Member State should have a national competitionauthority.3 " However, there are no rules as to the institutional

34. Council Regulation No. 17/62, 13J.O. 204 (1962), O.J. Eng. Spec. Ed. 1959-1962, at 87, amended by Council Regulation No. 59/62, 58J.O. 1655 (1962), amended byCouncil Regulation No. 118/63, 162 J.O. 2696 (1963), amended by Council RegulationNo. 2822/71, 285J.O. 49 (1971) [hereinafter Reg. 17].

35. See Commission Notice, O.J. C 39/6 (1993) [hereinafter 1993 Notice on Coop-eration Between National Courts and the Commission].

36. See Commission Notice, O.J. C 313/3 (1997) [hereinafter 1997 Notice on Co-operation Between National Authorities and the Commission]. For analysis see J.H.Maitland-Walker, Commission Notice on Co-operation Between National Competition Authoritiesand the Commission in Handling Cases Falling Within the Scope of Articles 85 and 86 of the E. C.Treaty, 2 EUR. COMPETITION L. REv. 124, 124-26 (1998).

37. Council Regulation No. 1/2003, O.J. L 1/1 (2002). This regulation will re-place the old regime established by Regulation 17 as of May 1, 2004. For more detailedanalysis see below.

38. This follows from many provisions of EU law that refer to "the authorities ofthe Member States." See, e.g. Consolidated EC Treaty, supra note 4, arts. 84, 85, O.J. C325/33, at 66 (1997), 37 I.L.M. at 94 (ex Articles 88, 89). See also Reg. 17, art. 9 et seq.,13 J.O. 204 (1962), Reg. 1/2003, art. 3 et seq. O.J. L 1 (2003).


structure of such an authority; hence it could be an independentagency or a sub-unit of a ministry. Furthermore, it is not imme-diately evident what kind of powers an authority should have inorder to be considered the appropriate national competition au-thority. On the one hand, the Commission strongly desires thatthe competition authorities of the Member States should havethe power to apply Articles 81 and 82"9 - besides applying theirnational law - since these provisions have long been held to bedirectly effective and, therefore, capable of creating enforceablerights and obligations directly for and against individuals in theMember States that have to be respected by the national courts.On the other hand, the competition authorities of a number ofMember States did not have the power to apply Articles 81 and82 in the past4" and the European Court has held that such dif-ferences between the application of EU competition law in theMember States do not violate the principle of equal treatmentunder Article 12.41 It seems that this is changing with the entryinto force of Regulation 1/2003.42

In this respect, the candidate countries have all done theirhomework. Every CEEC has adopted some kind of nationalcompetition law and all of them have created or designated com-petition authorities.4" The second conclusion to be drawn from

39. See 1997 Notice on Cooperation Between National Authorities and the Com-mission, 5 et seq., in particular 1 15, O.J. C 313 (1997).

40. Only the authorities of Belgium, France, Germany, Greece, Italy, the Nether-lands, Portugal, and Spain have had this power. The authorities of Austria, Denmark,Finland, Ireland, Luxembourg, Sweden, and the United Kingdom did not have the

power to apply Community competition law. See AugustJ. Braakman, European Com-mission, The Application of Articles 85-86 of the EC Treaty by National Courts in theMember States, available at http://europa.eu.int/comm/competition/publications/

art8586_en.pdf (July 1997); see also European Commission, Surveys of the Member States'Powers to Investigate and Sanction Violations of National Competition Laws (1995) [hereinaf-

ter Competition Surveys]; Ute Zinsmeister et al., The Application of Articles 85 and 86 ofthe E. C. Treaty by National Competition Authorities, EUR. COMPETITION L. REv. 275, 275-79

(1999).

41. SeeWilhelm v. Bundeskartellamt, Case 14/68, [1969] E.C.R. 1, [1969] C.M.L.R.100.

42. Art. 35(1) of the new regulation stipulates: the "Member States shall designatethe competition authorities or authorities responsible for the application of Articles 81

and 82 of the Treaty in such a way that the provisions of this regulation are effectivelycomplied with." Council Regulation No. 1/2003, art. 35(1), O.J. L 1/1, at 21 (2003).

43. For information on the respective authorities and laws, see Anti-trust and State

Aid Authorities and Legislation in the Candidate Countries, available at http://europa.eu.int/comm/competition/enlargement/candidatecountries. For more specific in-

formation on the timing of competition law adoption, with Hungary and Poland taking

2004] 655


the aforementioned sources is the fact that each Member Statemust provide for courts that are competent to handle cases ofinfringement of EU competition law.44 Again, there are no spe-cific criteria as to how these courts should be organized. There-fore, it is possible to designate specific courts or to entrust thetask to general administrative or commercial courts. However,the expectation would be that the application be effective.45 At aminimum, this seems to require that the competent courts areaware of their power, which must be exercised ex officio and notonly upon application," and that the jurisdiction of the desig-nated courts is stipulated by law and thus "that individuals are ina position to know with certainty the full extent of their rights inorder to rely on them, where appropriate, before the nationalcourts. ""4

B. Substantive Requirements with Regard to the Application ofEU Competition Law

As mentioned above, there are no formal rules as to thepowers and procedures of national competition authoritieswhen acting in an area (also) covered by EU competition law.

the lead in 1990, see Dutz, supra note 14. The most comprehensive source for informa-tion on current and future administrative capacity in the CEECs and on those legislativechanges which still have to be made, can be found in the National Programmes forAdoption of the Acquis 2002-2003, which were adopted by each candidate country. See,e.g., Office of Europe Integration, National Programme for the Adoption of the Acquis2002-2003, available at http://www.eib.ee/pages.php/02030103 (Estonia) (2002-2003).However, the information in the respective NPAAs is certainly not the most self-critical.Interestingly, a similar program has also been drawn up by Croatia already at a timewhen that country was not formally even a candidate country. See THE REPUBLIC OF

CROATIA, ACTION PLAN FOR EUROPEAN INTEGRATION OF THE REPUBLIC OF CROATIA

(1999). Finally, comparative analysis of national competition laws of the "old" MemberStates can be found in IMMENGA & MESTMACKER, supra note 5, at 41-52.

44. This follows from the direct effect, which has been attributed to Articles 81 and82. See Belgische Radio en Televisie v. SV SABAM, Case 127/73, [1974] E.C.R. 51;Stergios Delimitis v. Henninger Brftu AG, Case C-234/89 [1991] E.C.R. 1-935, 45. Asof May 1, 2004 it will follow directly from Article 6 and other provisions of Reg. 1/2003.

45. For a comprehensive analysis of the principle of effective remedies in nationalcourts, see TAris TRnmMAs, THE GENERAL PRINCIPLES OF EC LAw, 276-312 (1999).

46. This was clearly spelled out by the European Court of Justice in van Schijndel& van Veen v. Stichting Pensioenfonds voor Fysiotherapeuten, Joined Cases C-430 & C-431/93 [1995] E.C.R. 1-4705, 14-15.

47. The requirement of implementation of Community rights by national law -and not only by administrative order or practical application - has been affirmedmany times. The quoted passage is taken from the judgment of the E.C.J. of May 30,1991 in Commission v. Germany, Case C-361/88, [1991] E.C.R. 1-2567, 20.


However, analysis of the relevant passages of EU law and the No-tices published by the Commission can provide some insightsabout the expectations placed upon new Member States.

The distribution of powers and responsibilities between theCommission and the national authorities will change dramati-cally as of May 1, 2004 under Regulation 1/2003. It is no coinci-dence that this is also the day when the EU will grow from fifteento twenty-five Member States. The Commission has hadproblems keeping up with its workload and did not see itself in aposition to handle ten additional countries, particularly sincethe majority of those emerged only relatively recently from Com-munist planned economies and will have their share of difficul-ties with the implementation of EU law. Therefore, the Commis-sion pressed for a radical re-distribution of responsibilities, andthe national authorities will have many new responsibilities as ofnext May. This will be analyzed in more detail below. For now,it is also worthwhile to look at the old rules because their imple-mentation record by the candidate countries can provide in-sights into specific problems that may impact the implementa-tion of the future rules.

1. Substantive Requirements Imposed on National Authoritiesby the Law in Force

Again, we shall first look at the competition authorities, i.e.,the administration. Article 84 places an obligation on "the au-thorities in Member States [to] rule on the admissibility of agree-ments, decisions and concerted practices and on abuse of a dom-inant position in the common market in accordance with the lawof their country and . . . Article 81 . . . and 82" until the entryinto force of the necessary powers for the European Commis-sion. This provision largely lost its importance with the entryinto force of Regulation 17. However, it is still applicable tocommercial sectors which are exempt from the application ofEU competition powers, such as air and sea transport betweenthe EU and third States. More substantial powers were given tonational authorities by Article 9(2) of Regulation 17. Accordingto this provision, the authorities of the Member States werecalled upon to apply Articles 81(1) and 82 "as long as the Com-mission has not initiated any procedure."

The incentive for national authorities to apply EU competi-

2004] 657


tion law on their own was nevertheless limited. First, they mightopen proceedings concerning Articles 81 or 82 only to lose theircompetence if and when the Commission also opened proceed-ings.48 In case they terminated their proceedings and decided

the case, the Commission might still open proceedings and de-cide the case differently. The principle of supremacy of EU lawwould in such a case render the national decision inapplicable.Finally, the national authorities could only enforce Articles81(1) and 82. Until May 1, 2004, when Regulation 1/2003 be-comes applicable, they will not have the authority to grant indi-vidual exemptions under Article 81(3). They were thus morelikely to apply national competition law,49 which can generally beapplied alongside EU competition law. Yet, even when applyingnational rules, the national authorities have had to keep an eyeon EU competition law since they must not bring about conflict-ing results. Thus, they cannot exempt a certain conduct on thebasis of national law if the Commission wants to prohibit it andthey cannot prohibit a conduct on the basis of stricter nationallaw if the Commission has already exempted it or has at leastreceived a notification from the enterprise (s) involved and thereis a good chance that an exemption will be granted. In the inter-est of procedural economy therefore, it has been advisable fornational authorities to suspend their procedures as soon as theCommission opened a formal investigation.

Regulation 17 contained a number of provisions on collabo-ration between the EU Commission and national competitionauthorities. Article 10 of Regulation 17 provided for mutual in-formation or liaison between the Commission and the nationalauthorities. Under Article 11, the Commission could request in-formation from the national authorities and had to inform themabout any requests for information sent directly to undertakingsand associations in their territory. If the Commission wanted toconduct a general inquiry into a sector of the economy, it had toinform the respective national authorities according to Article

48. See Council Regulation No. 17/62, art. 9(3), 13J.O. 204 (1962), O.J. Eng. Spec.ed. 1959-1962 (stating "[a]s long as the Commission has not initiated any procedureunder Articles 2, 3 or 6, the authorities of the Member States shall remain competent toapply Article 85(1) or Article 86"). It should also be noted, however, that the nationalcompetence can be restored if the Commission decides to terminate an investigationwithout adopting a final decision on the matter.

49. See KORAH, supra note 5, at 23-24.


12 and then could request information from them. The corre-sponding duty not to disclose business secrets and other confi-dential information could be found in Article 20(2) of the Regu-lation. Article 13 of Regulation 17 placed an obligation upon"the competent authorities of the Member States"5 ° to under-take investigations at the request of the Commission and to issuethe necessary authorizations to their officials. More importantlyin practice, Article 14 required the national authorities to assistthe Commission's own officials when making investigations inthe territory of the Member States. These investigations becamefamous as "dawn raids" and played an important role in the en-forcement of EU competition law.51

In the field of merger control, Article 9 of Regulation 4064/8952 provides detailed criteria for cases in which a planned con-centration that has been notified to the Commission can be re-ferred to the national authorities. Many more useful hints onthe expectations upon national competition authorities could befound in the Commission Notice of 1997, including elaborateguidelines on the allocation of cases which (potentially) fell intoboth the competence of the Commission and of the national au-thorities.

As far as national courts were concerned, the obligationsplaced upon them by EU competition law were even morestraightforward. On the basis of the direct effect of Articles81(1) and 82, the national courts not only had the power, butalso the obligation of applying these provisions in cases thatcame before them.5" This meant that individuals and companieswho complained about other individuals or companies poten-tially violating EU competition law had to "have access to all pro-cedural remedies provided for by national law on the same con-

50. See supra note 48.51. An illustrative example for the problems that may arise in practice when an

enterprise does not cooperate in an investigation and the national authorities are re-quested to provide police powers can be found in Hoechst AG v. Commission of theEuropean Communities, Joined Cases 46/87 & 227/88, [1989] E.C.R. 2859.

52. Council Regulation No. 4064/89, Oj. L 257, at 13 (1990), amended by CouncilRegulation No. 1310/97, O.J. L 180 (1987) [hereinafter Merger Regulation].

53. See Belgische Radio en Televisie v. SV SABAM, Case 127/73, [1974] E.C.R. 51,16 (holding that "as the prohibitions of Articles 85(1) and 86 tend by their very na-

ture to produce direct effects in relations between individuals, these Articles create di-rect rights in respect of the individuals concerned which the national courts must safe-guard").

2004] 659


ditions as would apply if a comparable breach of national lawwere involved." 4

Articles 81 and 82 may come before national courts in par-ticular in the following scenarios: a) in contract law, a party toan agreement may claim that this agreement is anti-competitiveand thus unenforceable under Article 81(2); b) a victim of abu-sive behavior by a dominant firm may seek an injunction to endthe infringement; and c) individuals or undertakings who havesuffered damages due to the application of anti-competitiveagreements or abusive behavior may seek compensation undertort law. As noted above, in such cases the national courts wereunder an obligation to ensure the effective application of EUcompetition law. This could require careful analysis of secon-dary EU law in force, the case law of the ECJ and the CFI, as wellas decisions by the Commission in similar cases. Whenever suchanalysis might have left important questions unanswered, whichhad to be resolved in order to allow the national court to renderjudgment, the latter had to consider the preliminary referenceprocedure under Article 234 of the Treaty. In light of the aver-age twenty-four month duration of a 234-procedure in Luxem-bourg, provisional measures might have been necessary in theinterim, to prevent irreparable damage to the parties. Again,the respective Commission Notice provided additional practicalguidance.

2. Substantive Requirements Imposed on the NationalAuthorities as of May 1, 2004

The Commission has long been overburdened withthousands of notifications and requests for individual exemp-tions. To cope with the caseload, the Commission has adopted anumber of block-exemption regulations and has resorted to thepractice of responding with mere "comfort-letters," rather thanbinding decisions (negative clearance or exemption), to thebulk of the inquiries and applications. Nevertheless, the case-load cannot be handled any more in a proper manner and theMember State representatives, in the context of the budgetarynegotiations, have refused to allocate significantly larger re-

54. See 1993 Notice on Cooperation Between National Courts and the Commis-

sion, O.J. C 39, at 6, 11 (1993).


sources for additional staff.55 Therefore, the Commission pro-posed in 1999 to delegate more powers to the authorities of theMember States. The concrete proposals were outlined in theWhite Paper on Modernization of the Rules Implementing Art.85 and 86 of April 28, 199956 and can be summarized as follows.First of all, the need for prior notification of an agreementwhich might infringe Article 81 (1) - and thus the possibility toget a comfort letter, a negative clearance, or an exemption fromthe Commission and be protected from possible sanctions - willbe abolished. This will place the responsibility for lawful con-duct on the undertakings without offering the previous help sofrequently asked for from the Commission. Secondly, the na-tional competition authorities will be enabled to grant individualexemptions under Article 81(3). This will give them importantresponsibilities that may often be difficult to exercise, consider-ing the need to avoid contradicting decisions in different Mem-ber States and discriminatory treatment of internationally oper-ating enterprises.

Finally, the responsibility for the effective enforcement ofEU competition law will be placed primarily upon the nationalcompetition authorities and the national courts. This will notonly substantially increase the work load of the national authori-ties; it will also, for better or worse, put the protection of theEuropean competition system, as a whole, largely into the handsof the Member State competition boards and their courts. Eventhough the European Commission will obviously retain impor-tant supervisory powers and decide those cases which are of pan-European interest or raise entirely new legal issues,57 and even ifthe national courts can avail themselves of the procedure underArticle 234 to get help from the European Court of Justice, it isclear that this "modernization" will have far-reaching conse-quences, not only for the expectations upon the old and newMember States, but also for the very project of the internal mar-ket and workable competition in it.

55. The problems are explained in greater detail in JONES & SUFRIN, supra note 5,at 1015-37.

56. Commission White Paper on Modernization of the Rules Implementing Art. 85and 86 of the EC Treaty, O.J. C 132/1 (1999).

57. For a critical analysis of the discretionary power foreseen for the Commissionto take up cases it considers important, see Fritz Rittner, Kartellpolitik und Gewaltenteilungin der EG, 2 EUROPAISCHE ZEITSCHRiF-r FOR WATIRTSCHAFTSRECHT 129 (2000).

2004]


After a broad and sometimes controversial international de-bate amongst practitioners, academics, and Member State repre-sentatives, the reforms were finally adopted by the EuropeanCouncil as Regulation 1/2003 on December 16, 2002. This Reg-ulation replaces Regulation 17 and amends a range of other reg-ulations that used to refer to Regulation 17. It effectively imple-ments the proposed re-nationalization of the supervisory powersin competition law but also retains broad powers for the Com-mission to intervene in procedures before the national authori-ties. In a nutshell, the new system, which will become applicableas of May 1, 2004, places many more responsibilities on the na-tional authorities, not only by making them the primary enforc-ers of EU competition law, but also by requiring them to collabo-rate both horizontally with the competition authorities of theother Member States, as well as vertically with the Commissionitself. If anything, the requirements to be met by the nationalauthorities have become more serious and more complicated.

Concretely, the system retains the principle that anti-com-petitive agreements and concerted practices are prohibited ifthey do not satisfy the requirements of Article 81(3).5 What isnew is the stipulation that anti-competitive agreements and con-certed practices that do fulfill the requirements of Article 81(3)are lawful without a need to obtain an individual exemption orto conform to a block exemption. As mentioned earlier, it willnow be left to the undertakings to assess their current or in-tended future conduct in light of existing rules and case-law.The notification procedure will be eliminated.

Article 3 of the new Regulation specifically deals with caseswhere the national authorities apply national competition law,even though the case may affect trade between Member States.It spells out the obligation of the national authorities in thesecases to also apply Articles 81 and/or 82 of the Treaty. Foragreements and concerted practices, the second paragraph ofArticle 3 makes it clear that national authorities must not pro-hibit something that either does not restrict competition in thesense of Article 81(1) or qualifies for exemption under Article81(3). Stricter national rules are allowed only for the treatmentof unilateral conduct that is primarily in the context of Article82.

58. Council Regulation No. 1/2003, art. 1(1), O.J. L 1/1 (2002).


Article 5 of the new Regulation spells out the powers of thenational authorities in the application of EU competition law,that is for cases that may affect trade between Member States.The authorities are specifically given the power to require "thatan infringement [of EU competition law] be brought to an end,"the power of "ordering interim measures," the power of "ac-cepting commitments," and the power of "imposing fines, peri-odic penalty payments or any other penalty provided for in theirnational law." Since Regulation 1/2003 "shall have general ap-plication" and "be binding in its entirety and directly applicablein all Member States,"59 these powers of the national authoritiescome into being as of May 1, 2004 for cases that may affect tradebetween Member States even if national law does not provide forthem. The same is true for the national courts, which are given"the power to apply Articles 81 and 82 of the Treaty."60

Naturally, the new powers do not come without responsibili-ties. Since anti-competitive behavior that may affect trade be-tween Member States is illegal per se, contracts to this end mustnot be enforced, distortions of competition must be terminatedand proven damage must be compensated. If the authorities -

administrative and or judicial - of a Member State fail to fulfillthese obligations, the Member State is in breach of its obliga-tions and may become subject to proceedings under Article 226of the Treaty, and claims for State liability under the Francovichdoctrine.6'

Under the new Regulation, the Commission retains impor-tant supervisory powers. It can establish whether an infringe-ment of EU competition law has occurred and order its termina-tion.6 2 The Commission has this power after receiving a com-plaint or on its own initiative and regardless of whether or notthe case has already been taken up or even decided by the na-tional authorities. Article 7(2) specifically stipulates that theCommission can receive complaints from Member States andalso from "natural or legal persons who can show a legitimate

59. Consolidated EC Treaty, supra note 4, art. 249, 2, O.J. C 325/33, at 132(2002), 37 I.L.M. at 128 (ex Article 189).

60. See Council Regulation No. 1/2003, art. 6, O.J. L 1/1 (2002).

61. Francovich and Bonifaci v. Republic of Italy, Joined Cases 6 & 9/90, [1991]E.C.R. 1-5357, 2 C.M.L.R. 66 (1993).

62. See Council Regulation No. 1/2003, art. 7, O.J. L 1/1, at 9 (2002).

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interest. '63 This opens a direct avenue for review of national au-thorities' action or inaction.

In light of the fact that anti-competitive behavior that mayaffect trade between Member States by necessity concerns atleast two Member States, potential conflicts between the authori-ties of different Member States are built into the system. Thiscould become a source of many problems, including proceduraloverlap, contradictory decisions with regard to one and the samecase, different standards for similar types of cases, and otherforms of discriminatory treatment of enterprises in the internalmarket. To reduce the probability and scope of these kind ofproblems, Chapter IV of Regulation 1/2003 imposes a range ofcooperation procedures and obligations on the various nationalauthorities. The application of EU competition law shall bedone "in close cooperation" of all competition authorities of theMember States and the Commission. 64 The Member State au-thorities must always inform the Commission "before or withoutdelay after commencing the first formal investigative measures"when acting under Article 81 or 82.65 The Member State author-ities are also given the power to exchange information horizon-tally with their counterparts in the other Member States.6 6 Arti-cle 13 specifically addresses the cases where the authorities oftwo or more Member States are contemplating to act, are in theprocess of acting, or have dealt with a case. The Regulation en-visages "a network of public authorities applying the Communitycompetition rules in close cooperation."67 The national courtsare also receiving specific powers to request information fromthe Commission and/or their national competition authorities,and the national competition authorities not only receive thecorresponding powers to provide such information upon re-quest but even of their own motion. 68 Last but not least, anynational court judgment deciding "on the application of Article81 or 82" has to be forwarded "without delay" to the Commis-

69sion.

63. Id. art. 7(2), O.J. L 1/1, at 9 (2002).64. Id. art. 11(1), O.J. L 1/1, at 10 (2002).65. Id. art. 11(3), O.J. L 1/1, at 10 (2002).66. Id. art. 12, O.J. L 1/1, at 10 (2002).67. Id. pmbl., 15-18, O.J. L 1/1, at 4 (2002).68. Id. art. 15, O.J. L 1/1, at 12 (2002).69. Id. art. 15(2), O.J. L 1/1, at 12 (2002).


Without going into further detail, it is clear that the newsupervisory system will only succeed if two central requirementsare fulfilled: 1) the competition authorities and the competentcourts of all Member States have to be able to exercise the pow-ers bestowed upon them by Regulation 1/2003 when they areapplying or have to apply EU competition law; and 2) the com-petition authorities of all Member States and the competentcourts have to be willing to cooperate fully with their counter-parts in the other Member States and with the Commission.

With regard to the ability to fulfill these requirements,problems may arise in particular for those national authoritiesthat have not traditionally exercised these kinds of powers andare insufficiently prepared for it. This is not only the case inCEECs but also in several of the old Member States.

With regard to the willingness to fulfill the requirements,problems may arise in particular for those national authoritiesthat are not fully independent from political processes and maycome under pressure to treat national undertakings differentlyfrom foreign undertakings. Again, this is potentially the caseboth in CEECs and in several of the old Member States.

The remaining parts of this Article will look closer at waysand means to reduce these risks and to create a network of na-tional authorities of all twenty-five Member States that truly ful-fills its mission.

III. SUBSTANTIVE REQUIREMENTS WITH REGARD TO THEDEVELOPMENT AND APPLICATION OF NATIONAL

COMPETITION LAW

On the one hand, EU law does not provide any detailed ob-ligations for the content and administration of national competi-tion law. Again, the candidate countries can rely on differenceswhich continue to exist among the "old" Member States.7 ° Thus,for example, some Member States have the same principles asprovided for in Article 81 (1) and (3) in their national laws, i.e., aper se prohibition of anti-competitive agreements with a possibil-ity of exemption. In other Member States, such agreements arenot illegal as such and can only be prohibited on a case-by-casebasis. Some Member States provide different rules for horizon-

70. The following information is based on IMMENGA & MESTIMACKER, supra note 5,at 46-52. See also Competition Surveys, supa note 40.

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tal and vertical agreements, others do not. In some MemberStates, decisions regarding the prohibition of certain types ofagreements or behavior must be taken strictly on the basis oflegal and economic criteria, in other Member States considera-tions of economic or even social policy are explicitly permittedor even required. Furthermore, there are many differences asfar as the institutional architecture of the national competitionauthorities is concerned.

On the other hand, it is nevertheless possible to identifysome mistakes which should be avoided and some principleswhich should be followed by CEECs who want to create effectivenational competition rules and procedures.

In several CEECs, the competition authorities are weak insti-tutions by design. Either the supervisory functions are spreadout between several different units with unclear delimitation ofcompetencies and powers or competition supervision is en-trusted to departments under the authority of a ministry andthus subject to political directives.

Virtually all over Central and Eastern Europe, the publicservice, and hence administrative units such as competitionboards, has been suffering from a shortage of qualified lawyersand economists. Relatively low salaries, insufficiently attractiveworking environments, and traditionally low prestige of "Statejobs" did not help in attracting the best graduates from nationaluniversities, let alone experts with practical experience or West-ern training. Furthermore, as shall be developed below, in-housetraining programs have often not been very effective.

Structural weaknesses of the institutions and their staff arefrequently exacerbated by poorly drafted laws which are eitherhome-made and reflect the drafter's lack of experience, or theyare imported and basically just translate EU or Western statutes.To give but one example: those who have worked with Articles81 and 82 of the Treaty in practice will appreciate the indispen-sable guidance on the interpretation of these provisions whichhas to be drawn from the case law of the European Court ofJustice, including the more recent decisions of the Court of FirstInstance, and to some extent the decisions of the EuropeanCommission. Only the most basic and straightforward cases canbe dealt with by looking at the Articles themselves, as writteninto the Treaty. All "interesting" questions, such as whether or


not a national pension fund can be considered to be an "under-taking" for the purposes of Articles 81 or 82, or whether instruc-tions from the mother company to a fifty percent owned subsidi-ary must be seen as an "agreement" under Article 81, will requireextensive knowledge of the practice of the EU institutions. Nev-ertheless, several CEECs have pretty much translated only theseTreaty articles and are using this as the core of their nationalcompetition laws.

The practice of merely translating EU laws or the laws of aMember State such as Germany is also inadequate in light of thefact that these Western competition rules have not been de-signed for and are ill-suited to deal with certain problems thatare distinct and typical for transition economies.71 Such distinctproblems may seem short-lived, such as privatization and the dis-solution of State monopolies, but even where privatization wassuccessful,7 2 lack of broadly distributed national wealth has al-ready led to concentration of economic power in the hands of afew national or foreign investors. In other areas, privatizationwas less successful or has not happened yet 3 and State aids toailing monopolists may still be rampant. For these areas, theCEECs will have no choice but to develop their own solutionsand legal rules.

Other problems which are not fully taken into account byWestern rules include the widespread lack of transparency in theCentral and Eastern European markets, lack of reliable statistics,and the absence of a culture of cooperation and communica-tion. At least some of these issues will only be solved via genera-

71. See Nicolaides & Mathis, supra note 7, at 487.

72. For an early analysis, see PETAR SARPtEVI, PRIVATIZATION IN CENTRAL AND EAST-ERN EUROPE (1992). See also Stijn Claessens & Simeon Djankov, Ownership Concentra-tion and Corporate Performance in the Czech Republic (Univ. of Mich. Bus. Sch.,Working Paper No. 227, 1999); EVZEN KOCENDA &JAN SVEjNAR, THE EFFECTS OF OWNER-

SHIP FORMS AND CONCENTRATION ON FIRM PERFORMANCE AFTER LARGE-SCALE PRIVATIZA-

TION (Univ. of Mich. Bus. Sch., Working Paper No. 471, 2002) (presenting a more spe-cific analysis); Rainhart Lang & Sven Mfiller, Privatisation, Perception of Success and Atti-tudes of Managers in the East German Transformation Process, in 3 TEN YEARS OF ECONOMIC

TRANSFORMATION - SOCIETIES AND INSTITUTIONS IN TRANSITION 391-407 (Kari Liuhtoed., 2001); Nandini Gupta et al., Priorities and Sequencing in Privatization: Theory andEvidence from the Czech Republic (Univ. of Mich. Bus. Sch., Working Paper No. 323a,2001).

73. See, e.g. Vijai Maheshwari, Derailed: Estonia's Pioneering Railway Privatization Endsin Turmoil, Bus. CENT. EUR., Feb. 2001, at 27.

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tional change. 4

A. Other Problems in Practice7 '

As the present Article has shown, the requirements placedupon the competition authorities and courts in the MemberStates are manifold and often complex. On May 1, 2004, thesystem will take another quantum leap in that same direction.The effective application of EU competition law, therefore, re-quires that administrative authorities, prosecutors, attorneys,and judges collaborate in a sensible manner domestically andwith their counterparts in other Member States and with theCommission. If there is a cartel of silence among national law-yers, where legal counsel of both sides is either oblivious to thefact that EU competition law should be applied to the case athand or where counsel feels it might be relevant but hopes -

for lack of any specific knowledge - that the other side in thesame position will not raise the issue either, we cannot expecteffective application of the law. This, sadly, is still happeningevery now and then even in the "old" Member States, where law-yers should have had enough time to inform themselves andgain practical experience in the application of EU law. Clearly,the problem will be much more challenging in the "new" Mem-ber States as CEECs join the Union.

Legal education in CEECs has been slow to reform. In con-trast to East Germany, where not a single law professor was re-tained after re-unification, it was neither considered necessarynor possible in the other countries of the region to replace So-viet-era professors with Western-trained lawyers and academics.76

74. See Frank Emmert & Jorma Heinonen, Challenges to Estonian Economic Develop-ment Provided by the Forthcoming EU Membership, in I TEN YEARS OF ECONOMIC TRANSFOR-

MATION - SOCIETIES AND INSTITUTIONS IN TRANSITION 342, 354-71 (Kar Liuhto ed.,2001).

75. See Frank Emmert, Administrative and Court Reform in Central and Eastern Europe,9 EUR. L.J. 288 (2003) (presenting a more detailed analysis); NETHERLANDS SCIENTIFIC

COUNCIL FOR GOVERNMENT POLICY, TowARDs A PAN-EUROPEAN UNION: REPORTS TO THE

GOVERNMENT (2001); Saule Voluckyte, Why is Lithuania Lagging Behind in Terms ofEconomic Development? A Legal Analysis from the FDI (Foreign Direct Investment)Point of View (2002) (unpublished thesis, Concordia International University, Estonia)(on file with author).

76. As a consequence, I have come across many "colleagues" in CEECs who spentmost of their lives teaching subjects such as scientific communism and have now shiftedinto more timely fields, such as constitutional law, without, however, having necessarilyacquired real in-depth knowledge.


To this day, remuneration in the public sector and, conse-quently, in almost all universities in CEECs is not only lower thanin the private sector but also low in absolute terms. This hasmade it difficult for the law schools to attract highly qualifiedyounger teachers, in particular those who had the chance ofspending a year in Western Europe or the United States for aMaster's program. Most of those who did come back to teachare simultaneously pursuing a career at the bar or in business.This is not bad as such but limits the amount of time availablefor research, publications, supervision of students, and prepara-tion of lectures.

Academic research is consequently a low priority all overCentral and Eastern Europe. Those who would be qualified areoften too busy, receiving lucrative offers from many sides; andthose who are not qualified often produce results that are not upto international standards. Many of the younger professors donot have doctorates and have never produced substantial publi-cations that would satisfy international standards of quality.

Teaching is another problem. Probably more than half ofthe professors I have met across Central and Eastern Europe areteaching by sitting in front of the class, reading and explainingthe respective codes and statutes to their students. Textbooksare often not available since few who would be qualified to writethem actually find the time and since the laws are beingamended so often that many books would be outdated beforethey were printed. In exams, the students are expected to recitethe codes and statutes by heart and repeat the explanations pro-vided by the professor in class. Those who repeat best get thehighest grade, the others get a passing grade. And when semi-nar papers and final theses are due, it is not only common buteven commonly accepted that the bulk of the papers are eithercompletely descriptive or straightforward plagiarized.77 Real

77. At Concordia, we had very strict rules about plagiarism and academic honesty.'Ae taught international standards of academic research and publishing in a separatecourse and still had to fail a certain percentage of our students on their final papers. Ioften heard comments from the students that our standards were far beyond what wascommonly expected or tolerated in other Estonian universities, where their friendswere studying. To give but one concrete example: a well known professor of businessat the State university in Tartu instructed the students in a seminar to translate variouschapters of an American textbook by an American author into Estonian as their semi-nar papers and to hand in the results on diskette. Subsequently he published an Esto-nian textbook with these translated chapters under his own name as the author. Ironi-

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analysis and critical thinking are seldom taught and hardly everencouraged.

As a result, many lawyers in CEECs lack skills that we wouldconsider essential in the West. The law is frequently applied in avery positivist manner, just looking at the law in the books.Where there are lacunae in the statutes, justice may be denied.78

General principles of law and justice, as well as constitutionaland international standards of human rights and due process -

and the way they can enter into a "normal" case - are littleknown and in practice largely irrelevant. 79 Furthermore, there isno tradition of administrative law as in the West. The concept ofindividual rights against State measures did not exist in Soviettimes." Even today, administrative procedure codes are under-developed in most CEECs and substantive law is often patch-work. The lack of textbooks, or even just student collections ofthe most important statutes, is worse in administrative law thanin any other area of law.

In addition, there is a strange custom in certain CEECs thatprecedent is not only not binding but completely ignored.

cally, the scandal which followed was only about the question whether he should haveshared the royalties with his students. Nobody even mentioned the problem of plagia-rism and the man certainly did not lose his job. From all my travels and teaching inother CEECs, I think that I can conclude that the situation there is not fundamentallydifferent.

78. A well known case in Estonia concerned the legal counsel of a large bank thatwas taken over by an even larger bank. In the course of the take-over, the lawyer man-aged certain securities transactions after which bank assets in excess of I million USDfound themselves in one of his personal bank accounts. After the take-over, the newowners took the man to court on criminal charges and for repayment of the money.The case went all the way to the Estonian Supreme Court but ended with a completedefeat of the bank. The judges had not found any legal rules breached by the lawyerand thus no legal basis for ordering a repayment of the money. Notions such as unjustenrichment were either not argued or not accepted. For more detailed analysis, seeEmmert, supra note 75, at 295.

79. In another case from Estonia, ajournalist had publicly criticized a female poli-tician, calling her a bad mother because she left small children at home to pursue hercareer. He was taken to court on charges of libel. All the way up to the Supreme Courthis conviction was upheld without anybody ever thinking of the freedom of opinion andthe press. Unfortunately, the journalist was poorly advised and lost his case even beforethe European Court of Human Rights in Strasbourg. For a more detailed analysis, seeEmmert, supra note 75, at 291-92.

80. When a student of mine doing an internship with a large Swedish law firm inLithuania recently represented a client in an administrative court, she was askedwhether she realized that the State measure at issue had been taken in the public, orrather "State" interest. This alone seemed to settle the case for the judge who probablyblamed "the oversight" on the youth and lack of experience of the intern.


Judges seem to consider it part of their independence not beingbound or even influenced by precedent. They may actually beupset when precedents are cited in a legal brief, seeing this as anattack on their independence. They certainly do not consider itnecessary to explain when and why they deviate from precedent.As a consequence, judgments are often not systematically pub-lished since only students would be interested in them. Further-more, the outcome of a case is often completely unpredictableand a court may deviate from another - or even from its ownearlier practice - without a single word of explanation."'

When it comes to EU law, the weaknesses of the educationsystems are even more evident. While EU law is nowadays taughtat most - if not all - law schools in CEECs, the courses areoften limited to a descriptive introduction of the institutions anda historic overview of the integration process. Good textbooks indomestic languages are often lacking; the situation is even worsefor collections of judgments of the ECJ that go beyond one ortwo dozen leading cases. Consequently, EU competition law andpolicy, if it is taught at all, focus on superficial analyses of theTreaty articles, Regulation 17, and the Merger Regulation.

We must not be surprised, therefore, to find relatively fewpeople who have received a Western-style education and broadtraining in EU law during their student years in the national ad-ministrations and in the competition authorities. This short-coming has been realized by the CEECs themselves and has re-peatedly been criticized by the Commission. 2 The standard re-

81. When questioned whether or not they thought that Estonian judges were suffi-ciently independent, a majority of the respondents actually stated that in their opinionthe judges were too independent. The only logical explanation for such an opinion wouldseem to be the fact that the general public does not understand why many cases aredecided the way they are and does not see continuity or coherence in the practice ofthe courts. Quite to the contrary, manyjudgments are seen as arbitrary and accusationsof corruption and other forms of undue influence are quickly circulated. See FrankEmmert, The Independence ofJudges-A Concept Often Misunderstood in Central and EasternEurope, 4 EUR. L.J. 405, 405-09 (2002); Open Society Inst., Judicial Independence in the EUAccession Process (2001). These findings are also supported by the ABA's Central andEast European Law Initiative ("CEELI"), which has developed a judicial Reform Indexfor a number of Central European Countries. See, e.g., CEELI, Judicial Reform Index forSlovakia 2002, available at http://www.abanet.org/ceeli/publications/jri/home.html(June 2002).

82. See, e.g., Commission of the European Communities, Agenda 2000-CommissionOpinion on Estonia's Application for Membership of the European Union, DOC/97/12, at 13(1997) available at http://europa.eu.int/comm/enlargement/intro/ag2000-opinions.

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sponse has been the organization of ever more training seminarson EU law for civil servants, judges and prosecutors. However, asI have written earlier, theoretical seminars, often conducted byforeign lecturers with little or no familiarity with local circum-stances, can only do so much towards real reform of administra-tive and court procedures.8 3 All too often, the seminars havebeen offered in an unstructured manner or to an ever changinggroup of participants. And, most definitely, there was no system-atic benchmarking and assessment of successful learning.

In my own experience with seminars for civil servants,judges, and prosecutors, anywhere between Romania and Esto-nia, I have typically found myself in front of a group of maybesixty participants. Ten to fifteen of those were obviously inter-ested, had the required background knowledge and actively par-ticipated with sensible and even challenging questions. Anotherten to fifteen seemed interested but were too shy to participateand would not volunteer answers when approached directly(even where simultaneous interpretation was available). Andthe remaining thirty to forty persons could best be described asmerely physically present, if at all, since they were also drifting inand out or did not come back after coffee or lunch breaks. Itwas pretty obvious that these people either did not want to be inthe seminar but had to attend, used the seminar as an excuse tobe absent from their office, or were completely unable to followfor lack of linguistic skills or legal knowledge.

Twinning projects between authorities in CEECs and "old"Member States could have been an answer to the weaknesses oflecture-style seminars. However, typically the Central and East-ern European authorities were unable to send their most quali-fied staff for internships to the West for months at a time and,similarly, when Western experts were visiting, they were rarelyable to stay long enough in order to understand the local institu-tional and regulatory setting in sufficient detail to be able to giveconcrete advice. The Annual Conferences Between the Candi-date Countries and the European Commission have also beenuseful in bringing the experts together and providing a forum

htm, and the corresponding opinions about the other candidate countries. The pro-gress reports of 2001 and 2002 have emphasized the problem in even clearer language.

83. See Emmert & Heinonen, supra note 74.


for discussion of concrete issues, 84 but again, one two-day confer-ence per year can hardly turn the tide.

I am sure that there were other activities of which I am una-ware and I do not want to diminish the value of the work that isbeing done. Nevertheless, I think it is fair to say that progresshas been too slow and that there is simply no way that the (com-petition) authorities and courts in the CEECs can be trusted todutifully apply the acquis communautaire by May 2004. Therefore,preparations have to be changed in a qualitative manner and notonly intensified in a quantitative sense. And they have to be con-tinued for years into membership. In this context we must alsoremember that shortly after accession, considerable numbers ofthe most qualified lawyers with training in EU law will move fromnational capitals to Brussels. 5 This brain drain will not onlyleave painful gaps at home, it will also be a problem for thosewho go West, as they will not easily find contacts back home whocan provide qualified information and guidance for the best de-fense of national interests during negotiations in Brussels.Therefore, training programs should be offered for at least twoor three persons for every person needed later.

In light of these observations, the reform of EU competitionenforcement sought by Regulation 1/2003 could hardly come ata worse time. Many have expressed doubts regarding whetherthe national authorities of the old Member States would be will-ing and able to safeguard competition in an adequate manner.8 6

84. The sixth such conference took place in Tallinn on September 25-26, 2000.See Commission Press Release (Sept. 26, 2000). The seventh in Ljubljana onJune 18-19,2001. Commission Press Release, IP/01/858 (June 19, 2001).

85. According to my own estimation, a small country like Estonia will send someseventy-five A-level officials into the institutions within the first two years of member-ship. In addition, it seems that some 180 lawyer/linguists from each country, includingEstonia, will be required in the translation and interpretation services of the institu-tions.

86. For critical analysis of the Commission's proposals, see Jfirgen Basedow, WhoWill Protect Competition in Europe? From Central Enforcement to Authority Networks and PrivateLitigation, 2 EUR. Bus. ORG. L. REv. 443 (2001); Arved Deringer, Stellungnahme zumWeilbuch der Europiischen Kommission fiber die Modernisierung der Vorschriftenzur Anwendung der Art. 85 und 86 EG-Vertrag (Art. 81 und 82 EG), 11 EuZW, No. 1, at5-11 (2000); Claus Dieter Ehlermann, The Modernization of EC Antitrust Policy: A Legaland Cultural Revolution, 37 COMMON MKT. L. REv. 537 (2000); Damien Geradin, Competi-tion Between Rules and Rules of Competition: A Legal and Economic Analysis of the ProposedModernization of the Enforcement of EC Competition Law, 9 COLUM. J. EUR. L. 1 (2002);Ulrich Immenga, Eine Wende in der gemeinschaftsrechtlichen Kartellpolitik, 10 EuZW,No. 20, at 609 (1999); Emst-Joachim Mestmdcker, Versuch einer kartellpolitischen

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For the competition authorities in the CEECs, as they are joiningthe EU, this, for the time being, is not even a question.8 7

CONCLUSIONS AND SUGGESTIONS FOR CEECS

Neither Article 49 of the TEU, in the interpretation given toit by the Copenhagen Council in 1993, nor the White Paper orthe Agenda 2000, nor any other elements of the Pre-AccessionStrategy are giving specific instructions to the candidate coun-tries on how they must design their competition authorities, thestructure and content of their national competition laws, or thepowers to be given to the administrative authorities and courts.The information, which is available to CEECs on these issues iseither laconic or very general. It basically boils down to the re-quirement of being willing and able to effectively apply the acquiscommunautaire. Similarly, comparative analysis of the institu-tional and substantial rules applicable in the "old" MemberStates provides little guidance for CEECs.

Historically, the "old" Member States have had quite differ-ent approaches to competition supervision and the limitation ofEU competition law to those cases that have an impact on tradebetween the Member States - rather than just on the marketwithin one Member State - has meant that the national struc-tures, while losing "international" cases to the Commission, havenot been required to change in spite of internal market integra-tion.

Consequently, the candidate countries de facto enjoy widediscretion when it comes to the creation of national competitionauthorities and their supervisory powers. However, the liberaluse of that discretion is neither historically necessitated nor inthe best interest of the CEECs. Scientific analysis and empiricalevidence clearly demonstrate a direct relationship between effec-

Wende in der EU, 10 EuZW, No. 17, 523 et seq. (1999); Ernst-Joachim Mestmacker, TheEC Commission's Modernization of Competition Policy: A Challenge to the Community's Constitu-tional Order, 1 EURO. Bus. ORG. L. REv., No. 3. For a defense of the proposals see, e.g.,Andreas Geiger, Das WeiBbuch der EG-Kommission zu Art. 81, 82 EG - eine Reform,besser als ihr Ruf, 11 EuZW, No. 6, 165-69 (2000).

87. This view is shared, in essence, by Ieva Azanda, From Ex Ante to Ex Post En-forcement of Article 81: Efficiency, Legal Certainty and Community Enlargement(2003) (unpublished thesis, Concordia International University, Estonia) (on file withauthor); Dovile Vaigauskaite, Implementation of the EC Competition Law in Lithuania:Is the State Able to Apply the Acquis Effectively? (2002) (unpublished thesis, ConcordiaInternational University, Estonia) (on file with author).


tive protection of competition in the market on the one hand,steady and sustainable development, general economic growth,progress, and rising living standards for broad sections of thepopulation on the other. 88

In conclusion, I will try to make some suggestions regardinghow competition laws and authorities should be designed and im-plemented in CEECs to maximize their positive impact on econ-omy and society.1) National competition law should be concentrated in one sin-gle law of parliament. This law should contain the rules aboutanti-competitive agreements, abuse of dominance, concentra-tions, public undertakings, and anti-competitive State aids.89 Itshould also contain all required provisions on the creation of acompetition authority, the procedures to be followed by this au-thority, and its powers of investigation and enforcement. Guide-lines for the substantive range of such a law can be found bylooking at the combination of the manifold provisions of EUcompetition law. Thus, the national competition law should alsoinclude rules on individual and block exemptions, the block ex-emptions themselves, as well as all necessary information on thedefinition of markets, calculation of turnover, de minimis andrule of reason exceptions, etc. As part and parcel of such moredetailed rules, it would seem strongly advisable to incorporatecertain definitions and interpretations of terms as they havebeen developed by the case law of the European Court of Justiceand the Commission. Finally, the national competition lawshould provide for the powers of the national courts and for thecollaboration between the national authorities and courts andthe European Commission and Court of Justice. In light of theprevailing positivist traditions in Central and Eastern Europeand in light of the fact that competition authorities regularly in-terfere with individual rights and commercial freedoms, the lawcan hardly be too clear or too specific.2) The national competition authority should be concentratedinto one single and coherent administrative unit. This bodyshould be completely independent and insulated from politicallymotivated interference, separated organizationally and physi-

88. See SIMON BISHOP & MIKE WALKER, THE ECONOMICS OF EC COMPETITION LAW

(2d ed. 2002).89. Rules on market-oriented and competitive procurement by the various State

authorities might also be included.

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cally from the respective ministries. Its mission should be thebalanced development of competition based on market forces.For the achievement of this mission, it should be equipped withsufficient resources and powers, including the power to defendits prerogatives against interference by the executive or legisla-ture.3) The powers and obligations of the national courts in the areaof competition law and policy should be clearly spelled out inthe national law on competition. The courts must have full pow-ers of review of implementing regulations and individual deci-sions adopted by the competition authority. They have to securethe rights of individuals and undertakings, in particular when itcomes to safeguarding their procedural rights and the principleof equality of arms. At the same time, the courts also have tosafeguard the independence of the competition authority and,where necessary, assist in the enforcement of its decisions. Inlight of the limited experience many courts in CEECs have witheffective review of administrative decisions and the applicationof general principles of justice and due procedure, and with aview to cumbersome and antiquated procedures in many places,it would seem advisable to create a number of pilot courts whereyounger and Western-trained judges participate on a voluntarybasis and receive special rights to experiment with new tech-niques of case-flow management, as well as formal and procedu-ral simplifications.9 "4) Since all CEECs find themselves at different stages but ulti-mately in the same process of development of national competi-tion laws and authorities, it would also seem opportune to in-clude in the national competition laws specific rules and proce-dures for the development of the network of public authoritiesforeseen by Regulation 1/2003. The bilateral association agree-ments with the EU essentially established a hub-and-spine modelwhere the Commission alone had a good overview of theproblems encountered and solutions found in all candidatecountries. This kind of information now needs to be muchmore broadly distributed and utilized via functioning networks

90. See Maria Dakolias & Javier Said, Judicial Reform: A Process of Change ThroughPilot Courts, 2 EUR.J. L. REFORM 95, 96-117 (2000) (detailing usefulness of pilot courts inthis context); see also Russell B. Sunshine, Technical Assistance for Law Reform: Co-operativeStrategies for Enhancing Quality and Impact, 2 EUR. J. L. REFORM 61, 61-93 (2000); RUSSELL

B. SUNSHINE, MANAGING TECHNICAL ASSISTANCE - A PRAGrITIONER'S HANDBOOK (1995).


of civil servants and judges dealing with competition law and pol-icy. Regular opportunities for exchange of experiences can onlyimprove and speed up the learning process; furthermore, suchnetworks facilitate the exchange of information on markets andthe conduct of multinational enterprises.5) With regard to education on competition law and policy,there is first and foremost a need for high-quality textbooks onEU competition law in Central and Eastern European languages.In some countries, even basic textbooks on general EU law arestill not available in domestic languages. Good collections ofcases, particularly decisions of the Commission and rulings ofthe Court of Justice and the Court of First Instance, are hardlyavailable anywhere in the region. In economic terms, the reasonis market failure. Academics who have the necessary skills cansell them for much higher reward in the consulting markets,while such highly specialized books would sell only in very smallnumbers. Hence, government intervention with subsidies wouldbe called for.6) The need for training of large numbers of civil servants andjudges in EU law has been addressed so far by more or less struc-tured seminars and workshops. I have often come across a per-ception that civil servants and judges have already had morethan enough lectures on general aspects of EU law and shouldnow be trained on highly specific questions of, for example, cus-toms law, standard setting, comitology, etc. At the same time, Ihave not met many civil servants or judges who had a sufficientunderstanding of the practical impact of supremacy, direct ef-fect, the preliminary reference procedure and the so-calledFrancovich liability on their legal system and their own work.91

On the basis of these observations, I have concluded that train-ing has been largely inefficient. Of course, most of those whohave participated in such seminars will be able to explain thedifference between the European Council and the Council ofEurope and how the European Commission and Parliament arestructured. But already when it comes to a true understandingof the Cassis-de-Dijon principle and what it means for the freemovement of goods, the feedback is disappointing. What is re-ally required, therefore, are rules about a systematic education

91. SeeJoined Cases 6 & 9/90, Francovich and Bonifaci v. Republic of Italy, [1991]E.C.R. 1-5357, 2 C.M.L.R. 66 (1993).

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FORDHAM INTERNATIONAL LAWJOURNAL

to be taken by civil servants who are dealing with EU related mat-ters and who want to rise to executive positions. This trainingshould begin with courses on the institutions, decision-makingprocedures, and general principles of EU law, in particularsupremacy and direct effect. Attendance must be controlled andcomprehension must be monitored via class-room discussionand oral and written examinations. On the second level, judgesand civil servants should learn about the internal market; on thethird level about legal remedies in the EU; and on the fourthlevel about competition law and policy. Progression from onelevel to the next should be conditional upon successful demon-stration of skills in the examinations and all levels togethershould amount to at least 200-250 hours of in-class instruction.Last but not least, the instruction must preferably be done bynationals of the respective country and in the national language,as long as standards of quality can be ensured. Only when suffi-cient numbers of civil servants and judges have been trained insuch a manner, can we expect effective application of the acquiscommunautaire, including the competition acquis, in the CEECs,and if the bar associations would require, their members to par-ticipate as well, we could actually expect Central and Eastern Eu-rope to get into gear for the full utilization of the great opportu-nities of the European integration process.

Last but not least, the old Member States would be well ad-vised to consider similar training programs, as continuing educa-tion, for their civil servants, attorneys, and other legal profession-als.

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Documents

Fordham International Law Journal Introducing EU Competition Law and Policy in Central and Eastern Europe: Requirements in Theory and Problems in Practice